Form 4868 gives you an automatic six-month extension of time to file an individual return. It is granted without a reason, without a signature from anyone at the IRS, and without any judgement about why you need it. What it does not give you is more time to pay.
The two penalties are very different sizes
This is why filing an extension is almost always worth doing:
- Failure to file is 5 percent of the unpaid tax per month, up to 25 percent.
- Failure to pay is 0.5 percent of the unpaid tax per month, up to 25 percent.
The filing penalty is ten times the paying penalty. Somebody who cannot pay should still file, or at minimum extend, because doing nothing costs an order of magnitude more than paying late. The IRS sets out both in its guidance on the failure to file penalty and the failure to pay penalty.
How to file one
Three routes, all of them free:
- File Form 4868 electronically through tax software or a preparer.
- Make an electronic payment through IRS Direct Pay and mark it as an extension payment. That alone counts as filing the extension, with no form required.
- Mail a paper Form 4868, postmarked by the deadline.
The IRS explains the options on its page about an extension of time to file. Keep the confirmation. If a question arises later about whether the extension was valid, that receipt is the answer.
Estimate the payment, do not skip it
An extension is technically only valid if it contains a reasonable estimate of your liability. In practice the way to handle this is to over-estimate slightly and pay that amount with the extension. Overpaying gets refunded; underpaying accrues interest. Use last year's return as the starting point and adjust for what changed, or run this year's known figures through the income tax estimator.
When an extension is the right call
- A Schedule K-1 has not arrived, which is routine and often not resolved until late summer.
- A brokerage issued a corrected 1099 in March, and you suspect another correction is coming.
- You are still assembling records for a first year of self-employment or a rental property, and rushing means guessing.
- You want to fund a SEP-IRA later in the year, since a valid extension pushes that funding deadline out with it.
- A life event, illness or bereavement made April impossible.
Filing a complete, accurate return in October beats filing a wrong one in April and amending it in July. Amended returns take months to process and put a second set of eyes on the file.
What an extension does not extend
- The payment deadline. Worth saying twice.
- The deadline for contributing to an IRA or a health savings account for the prior year, which stays at the April date regardless.
- Estimated payments for the current year, which continue on their own schedule.
- State deadlines, unless your state grants an automatic extension when the federal one is filed. Many do. Some require their own form. Check with your state tax agency.
Automatic extensions you may already have
Taxpayers living outside the United States and Puerto Rico on the due date get an automatic two-month extension to file and pay, though interest still runs from the original date. Members of the armed forces serving in a combat zone get substantially longer. Taxpayers in federally declared disaster areas frequently receive postponed deadlines announced by the IRS for the affected counties, which apply automatically based on your address of record.
If you are extending because you cannot pay
File or extend on time anyway, pay what you can, and then set up a payment plan. An IRS instalment agreement is straightforward to request online, and the failure-to-pay penalty rate is reduced while a plan is in effect. Our guide on what to do when you owe the IRS walks through the options, none of which start with ignoring the deadline.